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HomeMy WebLinkAboutCAO-002-10~iar.~~t°n REPORT Leading the Way CHIEF ADMINISTRATIVE OFFICER Meeting: SPECIAL GENERAL PURPOSE AND ADMINISTRATION COMMITTEE Date: February 19, 2010 Resolution#: ~(~ -07'y /0 By-law#: N/A Report #: CAO-002-10 File#: Subject: CHANGE IN LEGAL SERVICES 2010 BUDGET Recommendation It is respectfully recommended that the General Purpose and Administration Committee recommend to Council the following: 1. THAT Report CAO-002-10 be received; 2. THAT the Chief Administrative Officer be authorized to implement in-house legal service in 2010 and to phase out the current legal service arrangement with Mr. Dennis Hefferon; 3. THAT the Corporate Organization structure be amended to have Mr. Hefferon and the future staff solicitor report to the Chief Administrative Officer; 4. THAT the costs related to the establishment of an in-house Legal Department be reallocated from various departmental legal accounts, and the projected saving of $150,000 be included in the 2010 budget; and 5. THAT Mr. Hefferon be advised of Council's decision. Submitted by~ o ~~w~, - ~'~~ Franklin Wu Chief Administrative Officer CORPORATION OF THE MUNICIPALITY OF CLARINGTON 40 TEMPERANCE STREET, BOWMANVILLE, ONTARIO L1C 3A6 T (905)623-3379 F (905)623-0720 REPORT NO.: CAO-002-10 PAGE 2 1. BACKGROUND The high cost of legal services has been a concern with members of Council, both past and present. Recently, during the budget workshop held on November 20, 2009, members of Council raised this issue again. In view of the current financial restraint and the need to scrutinize every expenditure, it is prudent that the cost of legal services be addressed as part of the 2010 budget deliberation. It should be noted that there has never been a concern over the quality of legal services provided. 2. CAUSES OF HIGH LEGAL COST 2.1 On average over the last 10 years, the Municipality expended on average about one million dollars annually on legal cost. The high cost is attributable in part to the claims and litigation, including OMB Hearings where the volume and complexity of the legal issues have caused budget overrun consistently every year. Notwithstanding the unpredictable nature of the foregoing which is a major challenge in expenditure control, there are two elements that are within the control of the Municipality. They are: a) the method it chooses to procure legal services, and; b) the policies or criteria it determines appropriate to monitor and scrutinize how, what, when and by whom legal services should be sought. 2.2 Our research in the procurement of legal services of similar size municipalities in Durham has revealed that Clarington legal cost is significantly higher than these municipalities. The primary reason is that most of those municipalities, with the exception of Ajax, have an in-house Legal Department where the staff lawyer is paid a salary at a significantly lower equivalent hourly rate than the hourly rate we pay under the current arrangement. In 2009, Clarington's legal cost, exclusive of specialized legal works and cost recovery from developers, was approximately $700,000. By REPORT NO.: CAO-002-10 PAGE 3 comparison, the City of Pickering's entire Legal Department budget is $320,000 and Ajax provides about $120,000 retainer for a local law firm to look after its legal needs annually. 2.3 Clarington does not have any written policy in place to determine how, when, what and by whom legal services should be sought. By practice, litigation and major legal matters are authorized by Council, and the day-to-day legal works are authorized by the Department Heads and/or their managers. Since the solicitor reports directly to Council, it has created a challenge for the CAO and senior staff to provide the necessary oversight and this adds to the difficulty of maintaining proper administrative and financial control. 3. IN- HOUSE LEGAL DEPARTMENT 3.1 The establishment of an in-house Legal Department involves the hiring of a solicitor and a supporting law clerk or paralegal personnel. Office space on the 4th floor of the Municipal Administrative Centre has been set aside for this purpose. The annual operating budget inclusive of salaries, benefits and office expenditure will be in the vicinity of $300,000. The job description of the new municipal solicitor will be modeled similar to the City of Pickering to include all municipal legal works inclusive of OMB hearings, bylaw prosecution, real estate transaction, development agreements, legal advice to Council and staff etc. but exclude labour law practices. 3.2 With complex legal matters or litigation of a specialized nature, the Municipality will continue to secure the services of an external solicitor as the need arises. The CAO and the staff solicitor will review each case and will be reporting to Council for direction. 4. BUDGET SAVING 4.1 The cost saving to the Municipality is estimated at $150,000 in 2010 and we expect this saving will increase in subsequent years once the transition from REPORT NO.: CAO-002-10 PAGE 4 the current arrangement to in-house legal services is completed. This saving has been built into the 2010 budget. 4.2 An added benefit to an in-house legal department is the elimination of the need to administer, review, and process legal invoices. This saves a significant amount of staff time. 5. THE TRANSITIONAL PERIOD 5.1 Prior to hiring the new municipal solicitor, it is important to ensure legal services are continuous. In this regard, it is recommended that Mr. Hefferon continue his current role. Once the staff solicitor is in place, the Chief Administrative Officer, in consultation with the staff solicitor, will address the issue of transferring the outstanding legal files to the staff solicitor. 5.2 Assuming Council approves the recommendations contained in this report, it will be several weeks or months before a staff solicitor is in place and comfortable to assume the full legal portfolio. During this interim period, it is important that the Municipality exercise its due diligence to provide proper oversight to ensure both accountability and transparency in legal expenditures. Therefore, it is recommended that the legal services be under the direct supervision and oversight of the Chief Administrative Officer effective immediately. The corporate organization structure will be amended accordingly.